Missed a phone EMI? RBI may lock your device remotely
What's the story
The Reserve Bank of India (RBI) is mulling a new rule that could let banks remotely lock mobile phones bought on Equated Monthly Installments (EMIs). The proposed measure, first reported by Reuters, is aimed at tackling the growing problem of bad loans in India's booming consumer finance sector. If approved, it would change how consumer electronics loans are managed in the country.
Proposal details
Proposed change to Fair Practices Code
The RBI is said to be considering revising its Fair Practices Code in the coming months. The proposed change would let lenders, including banks and non-banking finance companies, use a remote locking feature on mobile phones bought on credit. This means that if a borrower misses an EMI payment, the lender could remotely lock their device.
Policy rationale
Addressing rising NPAs in consumer finance
The RBI's proposed framework is primarily aimed at tackling the rising number of non-performing assets in the consumer loan segment. India's consumer loan market has grown rapidly in recent years, but so have defaults, especially on small-ticket loans under ₹1 lakh. A 2024 study by Home Credit Finance found a spike in EMI-based electronics purchases, which are particularly susceptible to missed payments.
Implementation strategy
Privacy concerns and technical guidelines
The RBI plans to amend its Fair Practices Code and issue new guidelines on how the technical phone-locking process should work. To protect borrowers' privacy and data, it is likely that the central bank will make it mandatory for lenders to take prior consent from customers before enabling this option. Notably, banks and finance companies won't be able to access any personal data on these phones.
Potential effects
Impact on consumers and advocacy groups' opposition
If implemented, the RBI's policy could affect millions of Indians who rely on EMIs to buy mobile phones and other electronic devices. India currently has over 1.16 billion mobile connections, with users relying on smartphones for work, education, and financial access. However, consumer advocacy groups are strongly opposing this move as they believe it could unfairly punish borrowers who depend on these devices for their livelihoods.